Limited progress seen in efforts to bring banks to underserved. (Tales of Two Banks -- Growth and Independence in L.A.).

WHEN Operation Hope convinced three financial institutions to acquire the banking functions of its three Hope Centers last year in Maywood, Watts and Baldwin Hills, the move seemed to validate its mission of luring financial institutions to serve inner-city customers.

A number of banks have opened branches in poorer areas of Los Angeles over the last decade or so. Some came in reluctantly after the 1989 strengthening of the Community Reinvestment Act, which placed lending, service and investment requirements on banking institutions. Others have seen new opportunities.

"You see banks opening branches in areas where they wouldn't have even driven around in 10 years ago," said Gary Wehrle, chairman of Pacific Crest Capital and a member of Operation Hope's board for 11 years. "It's an amazing change."

But there is disagreement as to whether there has been meaningful progress.

Local bank executives point to these moves: US Bank, the banking unit of U.S. Bancorp, has opened three inner-city branches within the last two years, including one near the black enclave of Baldwin Hills; it has made commitments to open two more.

Wells Fargo & Co. recently opened a branch in Pacoima. Another one of its branches, on Crenshaw Boulevard and Imperial Highway, has nearly doubled its deposits, to $30 million since former Vice Chairman Les Biller began devoting his attention to the branch after its 1998 merger with Norwest.

"If you don't pay attention to the communities you're in, you can't make money. We've always realized and made it our goal," said Biller.

A Puerto Rico-based institution, Banco Popular, has made Latino areas a focal point of its expansion into California. In its Lynwood branch, there is an adjoining check cashing service.

Progress in dispute

But Alan Fisher, executive director of the California Reinvestment Committee, complains that banks have only responded because of the CRA, the 26-year-old federal law whose intent was widely ignored for the first decade of its existence.

The group issued a report in 2002 showing that none of the 15 large banks in Los Angeles met lending benchmarks to African Americans, and only three -- National City Corp., US Bank and Bank of America -- met them for Latinos.

The committee takes credit for some success -- it used the CRA's rules to successfully wring concessions from US Bank when it acquired Western Bancorp in 2000.

It bad less success last year when it tried to delay Citigroup's acquisition of Golden State Financial, parent of CalFed. "We talked to them about making a real commitment to communities and they wouldn't do that. They wouldn't regard L.A. the way they would regard the United Kingdom," Fisher said.

Even when a bank does expand into the inner city, activists are cynical about the details.

Sharon Kinlaw, assistant director of the Fair Housing Council of the San Fernando Valley, argues that banks such as Union Bank of California -- which owns 40 percent of Nix Check Cashing parent Navicert Financial -- only open branches in low-income areas to market what she considers less savory offerings. Union Bank has co-located 31 of its ATMs at Nix locations in Southern California.

"I don't think Union Bank would open up a check cashing branch in Beverly Hills or Sherman Oaks. It's insulting' said Kinlaw.

Wells Fargo's Biller counters that at least the banks have a chance to convert check cashing and payday loan customers into full banking clients. "It's an interim step," he said. "You have to first offer something the consumer wants. But as time goes on, we'll educate them and they'll move into the mainstream.

Operation Hope founder John Bryant says that "a lot of bank executives still lack the vision to see Mrs. Jones as a high-quality customer."